The idea is often used by traders in the stock markets so that when a share price is considered to be below its long-term average or intrinsic value then it is deemed to be a ‘buy’ and if it is above its long-term average it is marked as a ‘sell’.
Despite crashes continuing to occur cyclically, today the Dow Jones sits far higher at around 13,200 points.
What we can observe from price history charts and from falling interest rates is that affordability is better than it has been, and in some cities (e.g. Sydney) affordability of certain properties has increased dramatically since early 2004.
The companies that never generated any cash or profits during and after the tech stock boom eventually became valued at somehwere close to $nil. No cash-generating ability ultimately equals no value.